What this calculator does (US only)
This tool estimates the US federal Child and Dependent Care Credit, a nonrefundable tax credit that helps offset the cost of care for a qualifying child under 13 or a disabled dependent or spouse so you (and your spouse) can work or look for work. It reflects the standard, ongoing IRS rules — not the temporarily expanded 2021 amounts. Always confirm current limits with the IRS or a tax professional before filing.
How to use it
Enter the total qualifying care expenses you paid during the year, choose whether you have one qualifying person or two or more, and enter your Adjusted Gross Income (AGI). The calculator caps your expenses, applies the correct percentage for your income, and shows your estimated credit.
The formula explained
Eligible expenses are limited to $3,000 for one qualifying person or $6,000 for two or more. The applicable percentage starts at 35% for AGI of $15,000 or less and drops by 1% for every $2,000 (or fraction thereof) of AGI above $15,000, never falling below 20%. Multiply the capped expenses by the rate to get the credit.
$$\text{Credit} = \min\!\left(\text{Expenses},\ \text{Cap}\right) \times \text{Rate}$$ $$\text{where}\quad \left\{ \begin{aligned} \text{Cap} &= \begin{cases} \$3{,}000 & \text{Persons} = 1 \\ \$6{,}000 & \text{Persons} \geq 2 \end{cases} \\[0.6em] \text{Rate} &= \max\!\left(0.20,\ 0.35 - 0.01\left\lceil \tfrac{\text{AGI} - 15000}{2000} \right\rceil \right) \end{aligned} \right.$$
Worked example
Suppose you paid $5,000 in care for two children and your AGI is $40,000. With two qualifying persons the cap is $6,000, so all $5,000 counts. AGI of $40,000 is $25,000 above $15,000; dividing by $2,000 and rounding up gives 13 steps, so the rate is \(35\% - 13\% = 22\%\). Your credit is $$\$5{,}000 \times 22\% = \$1{,}100.$$
FAQ
Is the credit refundable? Under standard rules it is nonrefundable, meaning it can reduce your tax to zero but does not generate a refund beyond that.
What counts as care expenses? Costs like daycare, after-school programs, and a babysitter that let you work qualify; overnight camp and schooling for kindergarten or above generally do not.
Why doesn't my rate go below 20%? The IRS sets a floor of 20% regardless of how high your AGI is, so the lowest credit is 20% of eligible expenses.
